Speeding up DoD acquisition process and increased COTS use among primes

Aligning technology advances with the slow Department of Defense (DoD) acquisition process and mitigating obsolescence with the long DoD life cycles are the biggest challenges facing commercial-off-the-shelf (COTS) embedded computing suppliers in today’s military electronics market, says Rich Sorelle, president and chief executive officer (CEO) of Abaco Systems in the following Q & A. He discusses how technology needs to get into the hands of warfighters more quickly, the best application bets for COTS suppliers with the increases to the DoD budget, and why prime contractors are choosing COTS more and more for their embedded computing needs. Sorelle also covers his company’s recent reorganization. Edited excerpts follow.

SORELLE: I’m president and CEO of Abaco Systems and report directly to Veritas Capital, a venture capital firm based in New York City that purchased Abaco from GE two years ago. At Abaco we’re focusing our resources on what we do best, which is ruggedized high performance computing for the military market in applications such as avionics, unmanned systems, radar, and intelligence, surveillance, and reconnaissance (ISR) applications.

MCHALE REPORT: It’s been about two years since Abaco left the GE umbrella and I understand the company has gone through a recent reorganization that included some layoffs and a new focus on how it approaches the defense market. How has the reorganization changed how Abaco approaches the military market?

SORELLE: Abaco took on too much, too fast, when setting up a stand-alone company outside of GE after the acquisition by Veritas. We had gotten away from what we do best and the reorganization enables us to focus even more on our customers in the defense and industrial spaces. We got our cost structure in line with our sales and today we have more employees than when we left GE. As part of our transformation, we’ve brought in a new chief financial officer (CFO), chief operating officer (COO), and chief growth officer (CGO) – all defense and private equity industry veterans. We’ve become even more competitive and have partnered with three silicon providers to ensure we adapt the latest commercially available technologies for our military and industrial customers.

MCHALE REPORT: What are the biggest challenges you face as COTS supplier in today’s defense market? Uncertainty within the DoD when it comes to acquisition policy? Supporting long life cycles/obsolescence? Other?

SORELLE: The biggest challenge facing COTS suppliers in this market is aligning technology advances with the long DoD acquisition process and associated long support cycles. While the DoD has an insatiable appetite for new capability to help them counter increasingly complex threats, the infrastructure is not set up to acquire this capability in a timely manner.

The long development cycles create major headaches with component obsolescence. For example, a chip supplier delivers next generation technology every nine to 18 months, while the military needs platforms to last 25 years. It takes on average 144 months to get a satellite system into space, but Elon Musk can do it in 18 months. Weapons systems that take eight years to deploy on average are already obsolete when they hit the field.

There are hundreds more anecdotes I could share, but few solutions to the problem. Rapid capabilities offices are being stood up in different services, but more needs to be done to get technology into the theater more quickly. The problem is that so much inertia has been created over the decades by the slow acquisition process.

You could trace it back to the development of military specifications (mil-specs), which originally were meant to be guidelines and tailored as time passed. That concept has been lost and now the government insists that every product developed strictly adheres to the mil-spec definitions. This has slowed procurement and deployment of technology to the warfighter. At the civil servant level it’s easier to say no because you don’t have to take the risk that comes with saying yes.

Leadership that embraces risk is needed to address these long-life cycle times. In the end, the sooner we can get warfighters the capability they need, the more efficiently they can do their jobs. We owe it to them. Many don’t realize this fact – less than 1 percent of the U.S population wears a military uniform. When you think about history, never has 1 percent protected the personal and economic freedoms of effectively the entire world. That 1 percent (young men and women) deserves the best technology we can provide at a speed that matters.

MCHALE REPORT: Are the primes turning more to COTS suppliers in the current procurement environment?

SORELLE: I think that primes are turning more and more to COTS suppliers, as they need a discriminator – pure processing power. COTS suppliers provide primes with a backbone for processing, enabling them to apply their domain knowledge such as electronic warfare algorithms. We provide the hardware and they provide the domain-related software. We do not have the domain knowledge nor do we want it. While the primes have the expertise to perform some of these tasks, they don’t have the desire to spend a lot of money on the infrastructure necessary to enable such technology development. Their real value is in domain knowledge. More and more primes are asking themselves: Why do I have to be expert in processor tech? There are experts out there who do nothing but that for a living and who follow Intel, NVIDIA, and other silicon providers. Let’s leverage that expertise.

MCHALE REPORT: The proposed increases in the administration’s DoD budget request are well documented. What are the best applications bets for COTS suppliers in today’s budget environment? Radar? Electronic warfare? Avionics? Unmanned Systems?

SORELLE: The good news is that overall budgets are increasing while planned budgets for procurement and RDT&E [research development test and evaluation] are steady, with most increases showing up in O&M [operations and maintenance] for repair and recapitalization of equipment. The sweet spot for companies like Abaco in all of this will be application areas that require small form factors and system-on-a-chip (SoC) technology.

Unmanned/autonomous programs that have strong current and planned RDT&E initiatives as the technology bow-wave pushes the envelope on processing power and latency improvements needed to implement capabilities at the tactical level;

Distributed command and control along with distributed execution that will require new technologies, algorithms, and reduced size, weight, and power – cost (SWaP-C);

Space and missile programs that will continue to strive for improved capabilities while reducing form factor size and increasing processing capabilities – small form factor requirements continue to emerge across both ground stations and missile components; and

Army tracked and wheeled vehicle programs that have strong current and planned funding profiles.

MCHALE REPORT: Are there any challenges that come with these increases?

SORELLE: A big challenge lies at the government level. A six percent increase in the budget was announced just six months after the FY2018 budget was passed. That is not a lot of time for a slow-moving government bureaucracy. DoD contracting officers will now have to put most of that funding in play over the next six months when they are used to having a year to complete this process. They have to obligate a bigger budget in half the amount of time. The political system and the government will need to change some processes and some laws to make sure the money gets spent efficiently.

MCHALE REPORT: The 4DSP acquisition added signal processing expertise to Abaco and made them stronger in the electronic warfare market. Are there other technology areas Abaco may want to add to its portfolio through acquisition?

SORELLE: 4DSP was a real discriminator in the market place for us. Their expertise in high-speed data acquisition and real time data processing using FPGA devices are applicable to many market segments in the military and industrial arenas.

Going forward we are looking at quite a few possibilities for acquisition and have an active pipeline, but I’m not at liberty to talk about them yet. We are always on the lookout for new technology and to continue our organic growth.

MCHALE REPORT: What markets outside of aerospace and defense are growth areas for Abaco?

SORELLE: The majority of our business is military focused, but we also support markets with similar requirements for high-performance computing and signal processing in harsh environments such as industrial, transportation, commercial aviation, and research.

MCHALE REPORT: Your career prior to Abaco included leadership positions at prime contractors such as Northrop Grumman and Exelis. How has that experience helped you now lead a key supplier to companies such as those?

SORELLE: Earlier in my career I was a part of Abaco’s customer base at the prime contractor and system integrator level at companies such as Grumman and Exelis. Now that I’m on the supplier side, that experience helps me know what Abaco’s customers – the primes – are looking for from suppliers and how they make buying decisions. From suppliers each wants the best technology, speed, and responsiveness. They want their suppliers to become part of a customer team as a trusted partner.

That experience also helps me understand the primes’ relationship with their customers such as the Navy, Air Force, Marines, and Army and how to work with contracting officers from each service. When you understand the procurement process from the Pentagon down to the individual chip, it gives you a visual on how to approach proposals by understanding what the customers need to provide to their customers.

MCHALE REPORT: When attending non-military trade shows, there seems to be a lot less gray hair at these events than at military technology events such as the large Army (AUSA) and Navy (Sea, Air, Space) shows. Does the military electronics industry have a talent recruitment challenge on its hands? If so, how can it be solved?

SORELLE: You have to a bit careful when talking about the big U.S. defense shows such as AUSA. Many of the attendees are business development professionals that came to the industry after long careers in the military. But that is not where the real engineering talent lies that I see everyday with our engineering teams at Abaco and with the talent pools over the years at the primes.

Over my career I’ve met quite a few young engineers who once they make a career within the defense industry, really like it. Support for new technology is what attracted me as a young engineer and I believe still attracts young engineering talent today. Many who left and went to commercial markets came back to the military industry, as they didn’t find the other markets nearly as exciting. As budgets increase and more job opportunities become available the early career talent pool will increase as well.

MCHALE REPORT: Looking forward, what disruptive technology/innovation will be a game changer in embedded computing? Predict the future.

SORELLE: The future will be about devices that combine hybrid technologies and SoC designs to enhance the integration and miniaturization of solutions for the warfighter. When I started as a systems engineer, a system would be comprised of multiple boxes, each with multiple boards with multiple chips on each board. Now you can put the capability of all those boxes onto a single chip. In a way it is mind-boggling.

Looking forward autonomous platforms and machine learning applications will drive much innovation in the military and commercial markets. The pace of technology development will be even faster than it was the last ten years and the DoD needs to keep up with it to ensure warfighters can leverage this capability as soon as possible.

Rich Sorelle, who joined Abaco Systems in October 2017, has more than 30 years of experience as a defense electronics executive across a variety of roles, with deep professional experience in manufacturing, engineering, program management, and business development. He joined Abaco from a 20-year career at ITT/Exelis, where he most recently served as President of the Electronic Systems division. In this role, Sorelle was responsible for creating and managing a strategic platform focused on electronic warfare. He started his career at Grumman Corp., a predecessor of Northrop Grumman, and received a Bachelor of Science degree in Electrical Engineering from the New York Institute of Technology.